The founder of a company issues 100,000 Class A preference shares for his own $250,000 investment. He then goes through three further rounds of investment, as shown below: $$\begin{array} { l c c }
\text { Round } & \text { Price } & \text { Number of Shares } \
\hline \text { Class B } & \$ 2.50 & 200,000 \
\text { Class C } & \$ 2.75 & 300,000 \
\text { Class D } & \$ 2.80 & 200,000
\end{array}$$ What is the post-money valuation for the Class D funding round?

Question

The founder of a company issues 100,000 Class A preference shares for his own $250,000 investment. He then goes through three further rounds of investment, as shown below: $$\begin{array} { l c c } 
\text { Round } & \text { Price } & \text { Number of Shares } \
\hline \text { Class B } & \$ 2.50 & 200,000 \
\text { Class C } & \$ 2.75 & 300,000 \
\text { Class D } & \$ 2.80 & 200,000
\end{array}$$ What is the post-money valuation for the Class D funding round?

Quizplus · Accepted Answer

The post-money valuation is the value of the company after the investment round. It is calculated by multiplying the number of shares issued in the round by the price per share, and then adding the value of the company before the round.In this case, the company issued 200,000 Class D shares at $2.80 per share. The value of the company before the round was $250,000 (the founder's investment) + $500,000 (the Class B investment) + $825,000 (the Class C investment) = $1,575,000.Therefore, the post-money valuation is $200,000 x $2.80 + $1,575,000 = $2,240,000.

The Founder of a Company Issues 100,000 Class a Preference